Today is the seven-year anniversary of the signing of the ACA, and we spent it with our eyes glued on the House, waiting for a vote to repeal the law. It looks like the vote is delayed, so too soon to call if it’s lucky number seven for the Republicans or the Democrats.
Meanwhile, there’s no question that the ACA has had a big impact on the US healthcare system -- particularly for the relatively small segment of the pre-65 population that doesn’t have access to care through an employer-sponsored plan. Many millions of people have gained insurance because of the law, which was its primary goal.
But the ACA has had an impact on employers, too, and it’s less clear what that has accomplished in that arena. A look at our survey data is a reminder of the hoops we’ve jumped through since the law was passed. Two big ones:
- In 2013, nearly one-third of employers did not offer coverage to all employees working 30+ hours per week. By 2016, virtually all of them had taken steps to make the offer of coverage to their formerly part-time workers, and all employers were tracking and reporting employee hours to demonstrate compliance. At the end of the day, all this administrative effort appears to have resulted in little benefit -- enrollment levels overall barely budged.
- Administrative burden is one thing -- the Cadillac tax is another. We can’t say it enough: the tax is not an effective method of penalizing rich plans because plan design is only one factor affecting plan cost and often less important than location and plan-member demographics. We initially projected that 33% of employers were at risk of being taxed in the first year, a number that would increase every year as benefit cost rose faster than the threshold amounts. Many employers responded by implementing and steering employees into consumer-directed health plans. While such a move might have been a sound strategy in any case, unfortunately about a third of employers have said they have made changes they would not have made in the absence of the tax, such as unbundling medical and dental/vision coverage, raising deductibles and other cost-sharing provisions, and eliminating healthcare FSAs.
Yet all along, employers have continually reaffirmed their commitment to offering health insurance. In 2010, just 6% of large employers said they were likely to terminate coverage within five years. By 2016, that already small number had shrunk to just 2%. In other words, the vast majority of employers really didn’t need a law to get them to offer coverage.
Whenever the vote and whatever the result, we’ll continue working with employers and policymakers on making a better, more efficient healthcare system for all.
What happens to the ACA has serious implications for employers. In response to the recent introduction of the American Health Care Act, which seeks to repeal much of the ACA and replace it with new policies, we’ve prepared a very brief survey to gauge employer response and ensure your voice is heard.
You can access the survey here. Your response will be kept strictly confidential.
The survey will close Wednesday, March 22. If you provide us with an e-mail address, we’ll send you the results. You’ll also be invited to register for a free webcast about the AHCA which will include a discussion of the survey findings.
This has been a busy week for healthcare in DC -- and the week’s not over yet! On the heels of the leaked Republican reconciliation bill language last Friday (that is already being described as out of date), the governors arrived over the weekend for a National Governors Association meeting that included dinner at the White House on Sunday. While the President tweeted that they “might” talk about healthcare, you can be sure the future of the Medicaid program and, more specifically, Medicaid funding, was at the top of the governors’ list of topics. Certainly, the 31 states that expanded Medicaid fear the funding implications of a block-grant program.
On Monday, the White House hosted a meeting with executives from the insurance companies to discuss government action required to "save" the failing individual market and convince (or perhaps, strong-arm) the carriers to stay in the game. Earlier this month, HHS announced revisions to the deadlines to file individual products to be offered in 2018 on the public exchange. This allows more time for legislative and regulatory action that might influence carrier decisions.
On Tuesday, the POTUS addressed the full Congress for the first time. He took a few minutes to lay out his five requirements for a replacement strategy. I’ll give you the short version below, but I recommend you also check out this Vox article, in which Sarah Kliff decodes the actual wording of each:
- Ensure Americans with preexisting conditions have access to coverage
- Help Americans purchase coverage through the use of tax credits and expanded health savings accounts
- Give states the resources and flexibility they need with Medicaid to make sure no one is left out
- Implement legal reforms to protect patients and doctors from unnecessary costs (presumably malpractice lawsuits) -- and bring down drug prices
- Allow the sale of health insurance across state lines
Meanwhile, it is widely reported that the Republican version of the reconciliation bill is changing constantly as various contributors attempt to balance the requirements of a very divided party -- all the while knowing that the Senate is working on its own replacement plan. We understand members of the House are reviewing the new bill and it is scheduled to go to committee for mark up next week.
Like I said, it’s been a busy week -- and there is no sign of the pace slowing anytime soon.
Final Department of Labor (DOL) rules require ERISA plans processing disability claims to treat coverage rescissions like benefit denials, impose more detailed denial notices written in a "culturally and linguistically appropriate manner," and expand claimants' response and litigation rights. The new rules generally apply for claims filed on or after Jan. 1, 2018, but transitional notice requirements apply for claims filed from Jan. 18, 2017 -- the final regulations' effective date -- through Dec. 31, 2017. While the new administration or Congress might delay, change, or even try to overturn the disability regulations, employers should still plan their next steps as the rules may remain intact.
When your boss asks about how the election will affect your benefit program, your response could be as easy as "It all depends." But you might want to provide more of an answer, and if so we'd like to help you out.
- We hosted two webcasts -- one focused on health benefits and time-off, and a second covering retirement, talent, investments and health. If you missed one or both, those links will take you to the replays.
- Depending on how deep you want to get into the possible options, we have developed a Post-Election Game Plan for our clients. Reach out to your favorite Mercer consultant if you are interested.
- The news is full of articles every day speculating on what will happen next -- transition plans, political appointments, etc. We will be tracking all the news and will do a roundup at the end of the week with the articles you don't want to miss. Watch for the first one this week.
A lot is going on. While it is certainly an exciting time to be in our business, there is no "Easy" button. We'd like this site to be a trusted resource for you in the weeks and months ahead.
Congress has passed legislation to increase enforcement of mental health and substance abuse parity rules and require health plans to apply parity standards to eating disorder benefits as part of a sweeping bill intended to spur development of new drugs and medical devices. The 21st Century Cures Act also includes provisions to let small employers use health reimbursement accounts (HRAs) to cover employees' costs for individual-market health insurance on a tax-free basis. The measure is expected to be signed into law by President Obama.
One part of the bill's mental health reforms focuses on the Mental Health Parity and Addiction Equity Act (MHPAEA). It directs regulators to come up with an "action plan" within six months of the bill’s enactment for improved federal and state coordination of enforcement of mental health parity and addiction equity requirements. The bill also seeks better compliance through clearer, more helpful guidance for employers and insurers.
Increasing public awareness of eating disorders is a key focus of the mental health reforms, and the bill mandates that parity standards apply to any eating disorder benefits, including residential treatment, covered by a group health plan.
The bill also would require HHS to clarify when it is appropriate for caregivers to share with others protected information about a patient's mental health or substance use disorder.
HRAs funded by small employers could cover employees' costs for individual-market health insurance on a tax-free basis under provisions in the bill. The provisions would apply to companies exempt from the Affordable Care Act (ACA)'s shared-responsibility provisions -- that is, employers with fewer than 50 full-time and full-time equivalent employees.
Under the Cures Act, only small employers not offering other group health plan coverage could reimburse health insurance costs through stand-alone HRAs. An employer's HRA contributions would reduce the relevant premium cost used to determine if an employee qualifies for any federal subsidies to buy coverage through a public exchange. Like other HRAs, small-employer HRAs could also reimburse qualified out-of-pocket medical expenses incurred by employees or their family members. Annually adjusted limits -- initially $4,950 for individuals and $10,000 for families -- would apply to small-employer HRA payments excluded from income.
Signaling that he is serious about rolling back the ACA, President-elect Donald Trump has chosen Rep. Tom Price (R-Ga.), one of Capitol Hill's fiercest critics of President Obama's health care law, to be Secretary of Health and Human Services. Price, an orthopedic surgeon and Chair of the House Budget Committee, is the author of one of the Republican ACA replacement plans, Empowering Patients First, which you can read about here.
Employers should be aware that Price calls for capping the tax exclusion. According to the article, “Price’s bill proposes limiting the employer-tax exclusion for insurance to $8,000 for individual policies and $20,000 for families... As popular as this provision will be with economists, you can bet that the public will hate it, as it would make some health plans significantly more expensive -- and face similar pushback to Obamacare’s Cadillac tax.”
It’s not a slam-dunk that his plan will be the replacement plan, but it does provide insights to what his preferences are. (Other Republican replacement plans that include a tax exclusion cap set a higher threshold -- $12,000 for individuals and $30,000 for families). As with the ACA’s excise tax, a cap on the tax exclusion would be a major focus of lobbying efforts for employers and advocacy groups like ABC, ERIC, and Fight the 40.
While Price’s replacement plan calls for eliminating Medicaid expansion, Trump selected Indiana health policy consultant Seema Verma to run the Centers for Medicare and Medicaid Services. Veerma has worked on redesigning Medicaid programs in states that have chosen to expand the program. She also spearheaded Indiana's healthcare reform efforts after the ACA passed to help health agencies prep for its implementation. So there could be some push and pull there.
There are significant differences between Price’s plan and those of other Hill Republicans. As HHS Secretary, Price won’t have the authority to replace the ACA himself. But he’ll be a key player in negotiations with Congress over which parts of which replacement plans they will choose, and he’ll control the replacement’s implementation. With this appointment, it seems the question now isn’t whether Republicans will move to repeal and replace the ACA -- it’s how quickly will they be able to coalesce around one option.
The new Mercer Survey on Absence and Disability Management found that employers continue to embrace workplace flexibility, in part demonstrated by a migration from traditional vacation/sick plans to paid time off (PTO plans). PTO plans are now in place in 63% of the organizations surveyed, up from 50% in 2013 and 38% in 2010. PTO plans provide employees more flexibility and reduce the need to determine (and track) what type of day off is being taken.
But despite their focus on time off, many employees do not use all of the days available to them: 44% of participants report that their employees take less than 80% of their allotted PTO time. And for the growing number of employees who work remotely, time off may not truly be time away from work. Employers are rethinking time-off program design to take into account all of these dynamics and help employees to achieve a healthier work/life balance.
Some employers -- more than one in 10 respondents -- have taken the step of offering unlimited vacation, at least to executives. However, most employers that have implemented unlimited vacation have found that employees take about the same time off as they were allotted previously under a standard plan.
But other types of paid leave -- particularly parental leave -- are increasingly important as well. Generous parental leave policies implemented by a number of companies, particularly in the tech industry, were covered widely in the press and drew national attention. While for most employers, disability benefits are still the only official company-sponsored paid leave for new moms that are provided, 24% of respondents provide paid parental leave for bonding to the birth parent.
In addition, 25% of employers reported providing a paid parental leave benefit to the non-birth parent. Whereas parental leave for the birth parent begins when the disability ends, parental leave for the non-birth parent usually begins upon the birth of the child. For those providing a paid parental leave benefit, the median number of weeks offered is six weeks for the birth parent and four weeks for the non-birth parent. In the vast majority of cases, the paid parental leave benefit covers 100% of the employee’s pay.
Additional findings from the survey include:
- Employers grapple with increasingly complex federal and state leave requirements
- More employers are choosing to outsource FMLA administration. In 2015, 40% of respondents outsource or co-source FMLA, up from 38% in 2013.
- Improving FML administration and reducing the impact of absence on operations are respondents’ top priorities for their absence and disability programs (cited by 44% and 42%, respectively).
- Nearly two-thirds of respondents (65%) have experienced an increase in leave requests over the past two to three years, and about a third reported an increase in the number of ADAAA leave accommodation requests (32%).
- Clinical management and formal return-to-work (RTW) programs for non-occupational disabilities remain a largely underutilized strategy for managing disabilities.
- Only about a third of participants formally communicate objectives and expectations regarding occupational or non-occupational absences or disabilities to managers and supervisors -- and of those, about half formally communicate objectives for occupational injuries/illnesses only.
- The Americans with Disabilities Act Amendments Act (ADAAA) has caused employers to revisit their treatment of disabled employees. Employers are now more likely to end employment after determining that return to work is not feasible and conducting the required discussion about accommodations. Historically, employers waited for Medicare eligibility to terminate medical coverage for disabled employees.
- Nearly half of respondents have revised (or are considering revising) their policies on terminating disabled employees as a result of ADAAA.
Mercer recently published a report on our 2015 Survey on Absence and Disability Management, a survey of over 450 US employers. The complete survey report, which includes data tables with results broken out by employer size, region and industry, is available for purchase here. We also will post survey highlights periodically on select topics here.
You remember the old algebra formulas from school: 3X + 2 = 11. Solve for X.
Now you’re solving problems in the business world. If you’re in charge of health benefits, solving for “X” means: Solve for lower premiums. Solve for more choice. Solve for higher quality, more efficiency, and better adherence.
As these challenges continue in the age of post-healthcare reform, an approach that addresses all of these problems is to focus on the provider network. A targeted provider network may include a couple of specific health systems. They’re designed to offer coordinated healthcare with cost efficiencies in place, which can reduce your company’s premiums and healthcare costs.
Here’s a closer look at why some employers are moving to what we at Mercer call “Network Value Solutions,” a way to access effective ACOs and narrow networks in local and regional healthcare markets.
1. Giving Choice Back to Employees and Still Reducing Costs
One of the most frustrating moments an employee can experience on your benefits site is when she realizes her physician is no longer in-network. Now, she’s got to find another physician, change health plans -- if she even has that option -- or resign herself to high out-of-network charges.
With Network Value Solutions, you can return some of that choice to the employee. For example, companies might offer choice of a high-performing, narrow network of top-quality hospitals and doctors alongside a traditional PPO network from a major insurance carrier. If employees enroll in that narrow network, in some cases requiring a change to their preferred doctor or hospital, they will save and their employer will save -- up to 15% on gross costs. And not only does this solution lower cost, it supports the principles of consumers and rewards smart shoppers.
2. Reducing the Administrative Tangles
Two decades ago, regional, provider-owned benefit plans were a popular choice among businesses and employees. Then many of them faded into the background as employers chose to consolidate their medical plan options, because of increased administrative complexities, regulations, and completing tasks that had nothing to do with growing their companies.
But today these plans are returning to the scene as a new generation of health benefits solutions. Only this time, companies are working with expert partners who handle the administrative headache. The re-emergence of these players has injected more competition into the health benefits marketplace and added back employee choice. There is also the added benefit of brand recognition: a regional network can include marquee names that local patients know and trust.
3. Improving Quality and Efficiency
Accountable Care Organizations (ACOs) offer incentives to groups of providers to deliver coordinated, high-quality care that saves money. ACO’s used to serve only Medicare. Though the model is new, they are showing results. They saved Medicare $466 million in 2015 alone, according to the Centers for Medicare and Medicaid Services.
Now, the private commercial sector has jumped on board. For example, one insurer’s ACO product includes more than 4,600 physicians and serves over 300,000 covered lives in north Texas. Since becoming fully operational in 2013, this ACO has reduced 30-day readmissions, hospital admissions, and medical plan costs for its customers.
ACOs have been proven to:
- Lower wait times for patients
- Reduce hospital readmission rates
- Reduce health complications
- Save employers an estimated 5% to 15% on total healthcare costs
Network Value Solutions: A Versatile Option
Network Value Solutions has an added dimension for large national companies: Employees in numerous states can select regional networks, high-performing narrow networks, and ACOs that are available to them locally.
When it comes to health benefits, flexibility and choice will continue to challenge employers into the foreseeable future. Network Value Solutions, (currently only available through Mercer Marketplace 365), offer employers new options -- without new administrative burdens -- while controlling costs and improving patients’ health.
With the election behind us, the news is full of speculation about what will happen next. We hosted a webcast for employers two days after the election and had a record turnout, taking the opportunity to conduct a quick opinion poll about repealing and replacing the ACA and other possible legislative actions by the new president and the 115th Congress.
Employers have strongly supported repealing the excise tax and the employer mandate since they were first enacted. In our poll last week, 63% of the more than 650 employers participating said they favored repeal-and-replace of the ACA; only 15% said they oppose; and 22% said they don't have an opinion yet. Admittedly, we don't have any real details on what repeal looks like, so this response can be interpreted as interest in something different from what is currently in place.
We also asked respondents how much of a priority they would like to see the new administration place on some issues of concern to employers. Here are the top three:
- Prescription drug cost and price transparency was considered the highest priority of the issues, with a rating of 4.3 (using a scale of 1-5). As we mentioned in an earlier post, a Kaiser Family Foundation survey found that prescription drug costs were the Number One health care issue for voters, ahead of Obamacare. Rising drug costs are currently one of the biggest drivers of employer health plan cost. With 40 new high-cost specialty drugs projected to hit the market each year for the next five years, it is easy to see why this tops the list.
- HSA expansion was the second priority, with a rating of 3.6. Implementation of high-deductible health plans has accelerated in recent years, and enrollment reached 29% of all covered employees in 2016. Employers support changes that would make these plans more attractive to employees, such as higher annual contribution limits and allowing funds to be used for OTC drugs and telemedicine visits.
- A national uniform paid leave framework was the third priority (3.3). With 42 different paid leave laws now on the books (in seven states and 34 municipalities), employers with operations spanning many locations face huge compliance and administrative challenges and many would welcome relief.
While this list is by no means everything being discussed in Washington related to health and group benefits, it is representative of some of the top issues for employers. With change in the air, you have an opportunity to influence the debate. Now is an especially important time for employers to make their voices heard in the policy debate, either independently or as part of several organizations such as the American Benefits Council, the ERISA Industry Committee, the National Business Group on Health, and the US Chamber of Commerce, to name just a few. Your congressional representatives and the incoming Trump administration need and want to hear from you!
Your new employee is 26 years old. He’s rarely sick -- maybe some occasional weekend-warrior soreness. His biggest health expense is his refrigerator full of grape Mountain Dew Kickstarts.
Then, there’s your vice president. She’s 55 and takes insulin for diabetes, just quit smoking, and has a husband and kids who rely on her insurance. She’s working hard to improve her health.
Obviously, these two have different health insurance needs. But many small and mid-sized employers would be challenged to offer more than one medical plan. In fact, about half of employers with 50 to 499 employees only offer one plan. How can they offer health benefits tailored to employees like these two, plus everyone in between?
A Market-based Solution
Private health exchanges are one approach that a small, but growing, number of companies are using. These exchanges cover some 6 million Americans and offer an array of plans, from traditional broad-network PPOs to high-performance narrow networks, and from plans with first-dollar coverage to HSA-eligible high-deductible plans.
They’re designed to address today's most challenging aspects of benefits delivery, including:
High Health Benefits Costs
Exchanges usually include employees from multiple companies, so they can leverage their volume to lower health premiums for employees, as well as plan costs for companies. Employees are also given more plans to choose from. They have the option to select higher-deductible health plans that lower their premiums, while lowering costs for employers as well. Converting to a private health exchange has saved companies up to 15% on their medical costs in the first year.
A Potpourri of Employees (the multigenerational workforce)
In the digital age, even small employers can hire staff from coast to coast. Millennials Skype with baby boomers. Generation Xers instant-message with seniors.
And everyone’s bringing different health needs to the table. Despite this, nine out of 10 employees say benefits are just as important as salary, and 63% say benefits are a major factor in choosing where to work.
Exchanges can offer a wide range of options to suit everyone, such as:
- Traditional health plans with HMOs and PPOs
- Narrow networks
- Provider-owned plans
- Plans for self-insured employers
- High-deductible health plans
Today, 80% of employees say a choice of health plans is critical to their job satisfaction. Employees are becoming smarter healthcare consumers. They want to shop around for healthcare and health benefits like they would anything else.
Sometimes, giving employees options is the best choice. For employers turning to private health exchanges, that means offering a variety of plans plus benefits counselors who can advise employees of all their options. The employees can select the best solution for themselves and their families. And that’s a solution everyone can live with.
Here’s an employee advocating for her own health: Before a medical appointment, she checks her health insurance to make sure the visit is covered. During the visit, she takes notes. Before the doctor writes the prescription, she asks, “Are there any generics?”
If more people had taken just that last step to use generic medications, consumers and employers could have possibly saved $25 billion -- yes, that’s billion with a B -- in out-of-pocket expenses between 2010 and 2012, the Journal of Internal Medicine reported in June 2016.
Persuading employees to be their own health advocates is a win-win-win for the employees’ health, their productivity, and the employer’s health care costs. Here are three steps to turn your employees into advocates for their own health:
- Tell employees they’re protecting themselves.
The physician may take the lead in providing medical services, but healthcare is ultimately a team sport. Because of the high potential for medical errors, patients are best positioned to play offense by asking a lot of questions and clarifying communications by all parties involved.
Medical errors may lead to serious or fatal events in 80,000 to 160,000 people per year, according to an April 2013 review of 25 years of medical malpractice claims by researchers at Johns Hopkins University. The most common errors are missed, incorrect, or delayed diagnoses.
The study underscores the importance of patients speaking up. Furthermore, seeking a second opinion results in revised diagnoses in 39% of cases, according to Advance Medical, a firm that helps patients obtain expert medical opinions.
- Point your employees to technology.
The palette of digital tools to empower employees to be their own health advocates is growing. Here are two:
About 30% of employers are encouraging the use of mobile health apps to help employees become more proactive about their health, according to Mercer’s 2015 National Survey of Employer Sponsored Health Plans. For those with chronic conditions, some apps could save up to $3,000 per patient each year, reported Health IT Outcomes in September 2014.
These tools pull back the curtain on healthcare pricing by comparing the price of specific procedures across providers in a given market. Given the wide range of prices charged for even common diagnostic services like xrays and MRIs, finding a lower-cost provider can save employees substantial out-of-pocket cost.
- Offer a “script.”
Many patients are murky about what to ask their doctors. However, questions like “What are all of my options?” can trigger alternatives that save money and have better outcomes.
The Agency for Healthcare Research and Quality lists 10 questions that can spark discussions between employees and their physicians. Consumer Reports even offers videos and brochures to help patients speak up about unnecessary tests and treatments.
Resources like these can teach your employees that self-advocacy is not only encouraged, but it’s also the key to value in healthcare -- managing cost while getting the best care.